What do you think about Obamas Plan to stop foreclosures?

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theBigD_IHB

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<a href="http://money.cnn.com/2009/02/12/news/economy/foreclosures/index.htm?postversion=2009021219">Obama to Stop Foreclosures</a>



"This will help put a floor on home values," said one person familiar with the negotiations.
 
[quote author="theBigD" date=1234542346]<a href="http://money.cnn.com/2009/02/12/news/economy/foreclosures/index.htm?postversion=2009021219">Obama to Stop Foreclosures</a>



"This will help put a floor on home values," said one person familiar with the negotiations.</blockquote>
It won't do crap...this is just another version of the mortgage modification that didn't work. So what if they lower someone's monthly mortgage payment by $200-$500 if the owned is $200k+ underwater...the owner will walk eventually. The only thing that will work is a reduction in the balance, but that won't happen.
 
"Artificially" supporting home values is a fantastic idea. Instead of letting things balance out, we need to do whatever we can to support home values and keep this bubble from completely deflating. GO OBAMA!
 
[quote author="usctrojanman29" date=1234542710][quote author="theBigD" date=1234542346]<a href="http://money.cnn.com/2009/02/12/news/economy/foreclosures/index.htm?postversion=2009021219">Obama to Stop Foreclosures</a>



"This will help put a floor on home values," said one person familiar with the negotiations.</blockquote>
It won't do crap...this is just another version of the mortgage modification that didn't work. So what if they lower someone's monthly mortgage payment by $200-$500 if the owned is $200k+ underwater...the owner will walk eventually. The only thing that will work is a reduction in the balance, but that won't happen.</blockquote>
I thought reducing the principal was part of the plan.
 
[quote author="awgee" date=1234566089][quote author="usctrojanman29" date=1234542710][quote author="theBigD" date=1234542346]<a href="http://money.cnn.com/2009/02/12/news/economy/foreclosures/index.htm?postversion=2009021219">Obama to Stop Foreclosures</a>



"This will help put a floor on home values," said one person familiar with the negotiations.</blockquote>
It won't do crap...this is just another version of the mortgage modification that didn't work. So what if they lower someone's monthly mortgage payment by $200-$500 if the owned is $200k+ underwater...the owner will walk eventually. The only thing that will work is a reduction in the balance, but that won't happen.</blockquote>
I thought reducing the principal was part of the plan.</blockquote>


<sarcasm>That will really help our financial system. I'll bet banks crank up the home loans once foreclosures stop.</sarcasm>
 
It is a great plan.



Keep prices propped up now and eventually the normal 2-5% appreciation will catch up. On a $800,000 house if you are underwater by 200k you will stay. Because in about 2018 your house will be worth 800k again!!!!



If you are entering the market, don't worry we will not let a pesky payment get in your way!!!! If you can't make it we will subsidize it for you. Eventually your home will return to the value you bought at. It may take 30 years but sometimes you just have to ride the market out and think of it as a long term investment instead of a short term investment.



This pisses me off becuase when McCain had a similar stupid A$$ plan he lost my support.
 
You guys all talk about being $200K under water on a house.... that's locally, but not the rest of the country. This solution is meant for the nation, not just our region. Much of the rest of the country has seen prices come down to or below their historic norm and are still heading down. You have people with a $200K loan and the house valued at $180K who cannot refinance. People in SoCal with $200K underwater will most likely walk, but that's not most of the country. If you want 4 million more foreclosures and the carnage that is going to cause to many many many Americans, fine.



Letting the market be as free as it wanted to be is what got us into this mess.
 
[quote author="stepping_up" date=1234570550]You guys all talk about being $200K under water on a house.... that's locally, but not the rest of the country. This solution is meant for the nation, not just our region. Much of the rest of the country has seen prices come down to or below their historic norm and are still heading down. You have people with a $200K loan and the house valued at $180K who cannot refinance. People in SoCal with $200K underwater will most likely walk, but that's not most of the country. If you want 4 million more foreclosures and the carnage that is going to cause to many many many Americans, fine.



Letting the market be as free as it wanted to be is what got us into this mess.</blockquote>


No, removing the consequences for acting stupidly is what got us into this mess.
 
[quote author="stepping_up" date=1234570550]

Letting the market be as free as it wanted to be is what got us into this mess.</blockquote>


If this is the conclusion of the intelligent people of this country, we are lost.
 
[quote author="awgee" date=1234571806][quote author="stepping_up" date=1234570550]

Letting the market be as free as it wanted to be is what got us into this mess.</blockquote>


If this is the conclusion of the intelligent people of this country, we are lost.</blockquote>


So far I haven't seen anyone intelligent that has come to that conclusion.
 
Letting the plan pass brings into question the very existence of contract law.



<blockquote>If you want 4 million more foreclosures and the carnage that is going to cause to many many many Americans, fine. </blockquote>


I don't want to see people suffer, but when people resorted to this kind of financial irresponsibility, I think we need a harsh lesson to ensure that future generations don't repeat this mistake again.
 
[quote author="stepping_up" date=1234570550]You guys all talk about being $200K under water on a house.... that's locally, but not the rest of the country. This solution is meant for the nation, not just our region. Much of the rest of the country has seen prices come down to or below their historic norm and are still heading down. You have people with a $200K loan and the house valued at $180K who cannot refinance. People in SoCal with $200K underwater will most likely walk, but that's not most of the country. If you want 4 million more foreclosures and the carnage that is going to cause to many many many Americans, fine.



Letting the market be as free as it wanted to be is what got us into this mess.</blockquote>


It is a matter of scale. If somone is upside down by 40k on a 200k home it is about the same time line go get back to the house being worth 200k again. About 10 years.



So anytime over the next ten years you want to buy you must realize there will be zero appreciation which is technically depreciation!



They are saying screw the non homeowners.
 
[quote author="awgee" date=1234571806][quote author="stepping_up" date=1234570550]

Letting the market be as free as it wanted to be is what got us into this mess.</blockquote>


If this is the conclusion of the intelligent people of this country, we are lost.</blockquote>


Awgee,



I thought we were all in agreement that loose lending and ever more creative financing is what allowed house prices to continue well beyond any rational valuation. Yes, borrowers were not thinking, some were outright greedy and many were irresponsible with the refinance and HELOC cash, but once prices got to be truly unaffordable people should not have qualified to borrow what they did. Not regulating or having any oversight on the entire financial system around mortgages allowed this to happen. Instead, we let this market be as free as it wanted to be (as stupid as it wanted to be, as irresponsible as it wanted to be, as greedy as it wanted to be) and we all know what that led to.
 
Free market isn't what got us into this mess. If the market was free, then the demand always meets supply. If the market was free, a vegetable picker just outside of San Francisco making 7K a year wouldn't have been able to get a home loan for 750K. The government is there to place laws and restrictions. Once our government tampered with that (removing restrictions and creating cheap moneY), no longer did we have a free market but a manipulated one. The banks simply took advantage of it. It worked too, since they are "too big to fail". Risk/reward has a balance. What they got was high reward without the high risk. The risk fell on you...the tax payer.



Your comment earlier...

"If you want 4 million more foreclosures and the carnage that is going to cause to many many many Americans, fine."



Yes I do. If you could afford it pre-bubble, you can afford it today. The person that bought at 200K and now sits at 180K isn't in trouble. Where do you get that idea? The payment is still the same. If I agreed to buy a home for 200K and could afford the payment, and now its worth 180K does that mean I can't afford it now?
 
[quote author="WINEX" date=1234572721][quote author="awgee" date=1234571806][quote author="stepping_up" date=1234570550]

Letting the market be as free as it wanted to be is what got us into this mess.</blockquote>


If this is the conclusion of the intelligent people of this country, we are lost.</blockquote>


So far I haven't seen anyone intelligent that has come to that conclusion.</blockquote>


I think Stepping Up is very intelligent, and that is what scares me. If intelligent people can be so influenced by the media and the government, what chance does the truth have? It makes me feel like giving up.
 
If there is a family that is steadily employed, but has a bad rate (ex. 12% or something) and underwater on their mortgage so cannot refi, and perhaps has had their income drop some due to cutbacks leading to fewer hours at work, you could argue it makes some sense to let them refi (ex. say at 7%) so they can afford their payments. Even if there is a govt subsidy - hey, govt is on the hook anyhow to pay as if lender forecloses, govt then has to eventually recapitalize the lender at an even greater cost. Sounds like the plan is aimed at people who are headed for foreclosure anyhow, so you could argue it is just cheaper this way for the taxpayer.
 
[quote author="stepping_up" date=1234573945][quote author="awgee" date=1234571806][quote author="stepping_up" date=1234570550]

Letting the market be as free as it wanted to be is what got us into this mess.</blockquote>


If this is the conclusion of the intelligent people of this country, we are lost.</blockquote>


Awgee,



I thought we were all in agreement that loose lending and ever more creative financing is what allowed house prices to continue well beyond any rational valuation.

</blockquote>
Yes, <em>"loose lending and ever more creative financing is what allowed house prices to continue well beyond any rational valuation."</em> You are absolutely correct.



[quote author="stepping_up" date=1234573945]

Yes, borrowers were not thinking, some were outright greedy and many were irresponsible with the refinance and HELOC cash, but once prices got to be truly unaffordable people should not have qualified to borrow what they did. Not regulating or having any oversight on the entire financial system around mortgages allowed this to happen.

</blockquote>
Not correct. There are and have been tens of thousands of pages of regulations and laws on borrowing, finance, mortgages, etc.

The loose lending can not occur to such an extreme without government intervention, in the form of manipulated interest rates by the Federal Reserve and fractional reserve banking. In a free market, interest rates are free market driven and no one can create money for their manipulation. Fiat money, fractional reserve banking, and a central bank are the hallmarks of central planning, not free market. Without supply and demand driven interest rates, there is no free market. In a true free market, no one who put their money at risk would ever be willing to loan it in the manner that it was loaned. Wild securitization occurred because of government guaranteed MBS through Fannie and Freddie which appeared to alleviate risk. Did it? This was anything but free market. In a free market with real money, (as opposed to fiat currency and fractional reserve banking), CDSes, CDOs, and derivatives can only be created to the extent that money is truly available and willing to be risked.



[quote author="stepping_up" date=1234573945]

Instead, we let this market be as free as it wanted to be (as stupid as it wanted to be, as irresponsible as it wanted to be, as greedy as it wanted to be) and we all know what that led to.</blockquote>


No, the market was not free. Government intervention in the form of a central bank, manipulated interest rates, fiat currency, and fractional reserve banking is what turns a regular up and down business cycle into extreme boom and busts.

What you hear on the main street financial media is 180 degrees incorrect.

Please read "<em>The Creature from Jekyll Island</em>" by G. Edward Griffin
 
[quote author="Anonymous" date=1234579437]If there is a family that is steadily employed, but has a bad rate (ex. 12% or something) and underwater on their mortgage so cannot refi, and perhaps has had their income drop some due to cutbacks leading to fewer hours at work, you could argue it makes some sense to let them refi (ex. say at 7%) so they can afford their payments. Even if there is a govt subsidy - hey, govt is on the hook anyhow to pay as if lender forecloses, govt then has to eventually recapitalize the lender at an even greater cost. Sounds like the plan is aimed at people who are headed for foreclosure anyhow, so you could argue it is just cheaper this way for the taxpayer.</blockquote>


Right and wrong are more important than either political or financial expediency.
 
[quote author="awgee" date=1234580296][quote author="Anonymous" date=1234579437]If there is a family that is steadily employed, but has a bad rate (ex. 12% or something) and underwater on their mortgage so cannot refi, and perhaps has had their income drop some due to cutbacks leading to fewer hours at work, you could argue it makes some sense to let them refi (ex. say at 7%) so they can afford their payments. Even if there is a govt subsidy - hey, govt is on the hook anyhow to pay as if lender forecloses, govt then has to eventually recapitalize the lender at an even greater cost. Sounds like the plan is aimed at people who are headed for foreclosure anyhow, so you could argue it is just cheaper this way for the taxpayer.</blockquote>


Right and wrong are more important than either political or financial expediency.</blockquote>


What are your assumptions to prove that the case above is wrong? Which values are you measuring it against?
 
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